Miami Criminal Defense Blog

White collar criminal prosecutions are in the news a lot these days. Since it's always wise to know where investigative trends are going, let's take a look at what's been happening in late 2019 and where you may expect investigative efforts to focus next.

At the end of 2019, the Justice Department got tough on a number of high-level executives over issues related to the way that their companies reported their success to investors. Executives at the tech startup Outcome Health were indicted for both bank and wire fraud, falsification of documents, as well as other kinds of illegal misconduct for allegedly deceiving banks, clients and investors alike.

Embezzlement is a very specific type of crime. Unlike ordinary theft or burglary, embezzlement requires you to be part of an organization and in a relatively trusted role. That generally only happens when you've been in a position of authority inside a company for some time.

Why on earth would someone throw all that hard-earned trust away? Researchers say that embezzlers, by and large, are not bad people who cavalierly engage in fraud. Instead, there are usually three factors that come into play before embezzlement happens:

1. Individual pressure. Gambling addictions, drug dependencies, alcoholism and spending problems all have one thing in common: They're expensive. Some people embezzle to fund their vices. Other people embezzle merely to hide them.
2. An opportunity. You can't embezzle if you aren't in a position to do so. The lack of oversight you experience can sometimes lead to a feeling of invulnerability that makes a person willing to take chances.
3. The ability to justify one's actions. Many embezzlers do one of two things. They convince themselves that they're owed something by the company after years of hard work and service or they promise themselves that the embezzlement is a temporary fix for their problems and vow to pay the money back before it is missed.

Being subjected to a federal investigation is enough to make anybody a little bit paranoid -- and rightly so. You may wonder if your office is about to be raided any minute now, or whether you'll get home from work to find federal agents picking apart your personal papers and scouring through your computer. You may also start to worry that your phone lines are being tapped.

It's not an utterly irrational fear. Reports as early as 2013 indicate that federal authorities are using more and more wiretaps in their white-collar investigations. Once upon a time, wiretaps were mostly used in drug trafficking and murder investigations.

It's January, which means that it won't be long before the Internal Revenue Service (IRS) starts its annual parade of tax notifications and warnings, all designed to remind people -- especially business owners and professionals -- of their legal obligations.

In other words, you're being reminded that it's against the law to cheat on your taxes, and that the IRS will aggressively pursue suspected tax fraud whenever they can. But what makes the IRS start to question what's going on with your taxes in the first place? How do they pick who gets investigated?

• The Information Returns Processing (IRP) System: This system draws matches between related returns and electronic records. Payroll records, W-2s, 1099s and more are loaded into computer databases, and the IRS looks for gaps in the paper trial between them.
• Social media information: Human beings tend to like to display their wealth in ways both subtle and obvious. If your visible lifestyle conflicts with what seems to appear on your social media page, you can bet that the IRS is likely to be curious. Far too many people don't realize just how much social media is used in legal investigations these days and think that what they post online is somehow likely to be overlooked. (There's even a possibility that the IRS may be looking at your old emails, thanks to a gap in the Electronic Communications Privacy Act that makes email over 180-days old on a third-party server legally "abandoned.")
• Whistleblower reports: There's huge legal, ethical and financial incentives for a whistleblower to let the IRS know about a company's or professional's wrongdoings. Aside from all of that, some whistleblowers are motivated out of anger or revenge. An angry romantic partner or a disgruntled employee might relish "turning you in" to the IRS -- even if there wasn't a reward.